Share-Based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

10.	Share-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation,” which requires the Company to recognize compensation expense for stock-based awards, measured at the fair value of the awards at the grant date. The Company recognized expense of $0.6 million and $0.5 million during the three-month periods ended March 31, 2016 and 2015, respectively.

The Company granted approximately 100,000 options during each of the three-month periods ended March 31, 2016 and 2015. The weighted-average fair value of stock options granted during the three months ended March 31, 2016 and 2015 was estimated at $2.07 and $7.15 per option, respectively, using the Black-Scholes option-pricing model based on the following assumptions:

Expected Volatility: The Company utilizes a volatility factor based on the Company’s historical stock prices for a period of time equal to the expected term of the stock option utilizing weekly price observations. For the three months ended March 31, 2016 and 2015, the Company utilized a weighted-average volatility factor of 39% and 54%, respectively.

Expected Term: For the three months ended March 31, 2016 and 2015, the Company utilized a weighted-average expected term factor of 6.5 years.

Risk-Free Interest Rate: The risk-free interest rate factor utilized is based upon the implied yields currently available on U.S. Treasury zero-coupon issues over the expected term of the stock options. For the three months ended March 31, 2016 and 2015, the Company utilized a weighted-average risk-free interest rate factor of 2.1% and 2.0%, respectively.

Expected Dividends: The Company utilized a weighted average expected dividend rate of 3.6% and 1.6% to value options granted during the three months ended March 31, 2016 and 2015, respectively.

The Company granted approximately 15,000 options during the three-month periods ended March 31, 2016. The weighted-average fair value of restricted stock units granted during the three months ended March 31, 2016 was estimated at $6.65 per unit using the value of stock in the open market on the date of grant. There were no restricted stock units granted during the three months ended March 31, 2015.

The fair value of the stock-based awards granted is recorded as compensation expense on a straight-line basis over the vesting periods of the awards adjusted for the Company’s estimate of pre-vesting forfeitures. The pre-vesting forfeiture estimate is based on historical activity and is reviewed periodically and updated as necessary. There is a portion of the outstanding restricted stock units that have both performance and service-based vesting conditions. The Company has determined that the performance condition is likely to be met. As such, the related expense will be recognized over the service period.

The Company received $2,000 in cash from employees and directors exercising options during the three months ended March 31, 2015. The intrinsic value of options exercised during the three months ended March 31, 2015 was $15,000. There were no options exercised during the three months ended March 31, 2016.